1. Chapter 1 Accounting and the Business Environment
Demonstration Problems
© 2016 Pearson Education, Inc.

2. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Future Enterprise's balance sheet data at May 31, 2016, and June 30, 2016, follow:
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000
For each of the following situations with regard to common stock and dividends of a corporation, compute the amount of net income or net loss during June 2016. a.
The company issued $20,000 of common stock and paid no dividends. b.
The company issued no common stock. It paid cash dividends of $15,000. c.
The company issued $18,000 of common stock and paid cash dividends of $25,000.
© 2016 Pearson Education, Inc.

3. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 a.
The company issued $20,000 of common stock and paid no dividends.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
© 2016 Pearson Education, Inc.

4. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 a.
The company issued $20,000 of common stock and paid no dividends.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
20,000
© 2016 Pearson Education, Inc.

5. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 a.
The company issued $20,000 of common stock and paid no dividends.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
20,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

6. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 a.
The company issued $20,000 of common stock and paid no dividends.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
20,000
Less: Dividends
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

7. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 a.
The company issued $20,000 of common stock and paid no dividends.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
20,000
75,000
($75,000 + $0)
Less: Dividends
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

8. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 a.
The company issued $20,000 of common stock and paid no dividends.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
20,000
Net income for the month
5,000
($75,000 − $40,000 − $20,000)
75,000
($75,000 + $0)
Less: Dividends
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

9. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 b.
The company issued no common stock. It paid cash dividends of $15,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
© 2016 Pearson Education, Inc.

10. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 b.
The company issued no common stock. It paid cash dividends of $15,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
© 2016 Pearson Education, Inc.

11. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 b.
The company issued no common stock. It paid cash dividends of $15,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

12. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 b.
The company issued no common stock. It paid cash dividends of $15,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
Less: Dividends
15,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

13. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 b.
The company issued no common stock. It paid cash dividends of $15,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
90,000
($75,000 + $15,000)
Less: Dividends
15,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

14. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 b.
The company issued no common stock. It paid cash dividends of $15,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
Net income for the month
50,000
($90,000 − $40,000)
90,000
($75,000 + $15,000)
Less: Dividends
15,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

15. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 c.
The company issued $18,000 of common stock and paid cash dividends of $25,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
© 2016 Pearson Education, Inc.

16. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 c.
The company issued $18,000 of common stock and paid cash dividends of $25,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
18,000
© 2016 Pearson Education, Inc.

17. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 c.
The company issued $18,000 of common stock and paid cash dividends of $25,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
18,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

18. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 c.
The company issued $18,000 of common stock and paid cash dividends of $25,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
18,000
Less: Dividends
25,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

19. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 c.
The company issued $18,000 of common stock and paid cash dividends of $25,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
18,000
100,000
($75,000 + $25,000)
Less: Dividends
25,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

20. © 2016 Pearson Education, Inc.
Demonstration of E1-21
Total assets
May 31, 2016
$ 160,000
June 30, 2016
$ 225,000
Total liabilities
120,000
150,000 c.
The company issued $18,000 of common stock and paid cash dividends of $25,000.
Stockholders’ equity, May 31, 2016
$40,000
($160,000 − $120,000)
Add: Issuance of common stock
18,000
Net income for the month
42,000
($100,000 − $40,000 −$18,000)
100,000
($75,000 + $25,000)
Less: Dividends
25,000
Stockholders’ equity, June 30, 2016
$75,000
($225,000 − $150,000)
© 2016 Pearson Education, Inc.

21. Demonstration of E1-31, E1-32, & E1-33
The account balances of Louis Computer Service at March 31, 2016, follow:
Equipment
$18,000
Service Revenue
$ 13,500
Office Supplies
900
Accounts Receivable
7,600
Notes Payable
8,000
Accounts Payable
3,500
Rent Expense
700
Common Stock
3,000
Cash
2,500
Salaries Expense
2,000
Dividends
1,300
Retained Earnings, Mar. 1, 2016
Requirements
E1-31.
Prepare the income statement for the month ending March 31, 2016.
E1-32.
Prepare the statement of retained earnings for the month ending March 31, 2016.
E1-33.
Prepare the balance sheet as of March 31, 2016.
© 2016 Pearson Education, Inc.

22. LOUIS COMPUTER SERVICE
Demonstration of E1-31
Service Revenue
$13,500
Salaries Expense
2,000
Rent Expense
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2016
Service Revenue
$13,500
© 2016 Pearson Education, Inc.

23. LOUIS COMPUTER SERVICE
Demonstration of E1-31
Service Revenue
$13,500
Salaries Expense
2,000
Rent Expense
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2016
Service Revenue
$13,500
Expenses:
Salaries Expense
$2,000
© 2016 Pearson Education, Inc.

24. LOUIS COMPUTER SERVICE
Demonstration of E1-31
Service Revenue
$13,500
Salaries Expense
2,000
Rent Expense
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2016
Service Revenue
$13,500
Expenses:
Salaries Expense
$2,000
Rent Expense
700
© 2016 Pearson Education, Inc.

25. LOUIS COMPUTER SERVICE
Demonstration of E1-31
Service Revenue
$13,500
Salaries Expense
2,000
Rent Expense
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2016
Service Revenue
$13,500
Expenses:
Salaries Expense
$2,000
Rent Expense
700
Total Expenses
2,700
© 2016 Pearson Education, Inc.

26. LOUIS COMPUTER SERVICE
Demonstration of E1-31
Service Revenue
$13,500
Salaries Expense
2,000
Rent Expense
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2016
Service Revenue
$13,500
Expenses:
Salaries Expense
$2,000
Rent Expense
700
Total Expenses
2,700
Net Income
$10,800
© 2016 Pearson Education, Inc.

27. LOUIS COMPUTER SERVICE Statement of Retained Earnings
Demonstration of E1-32
Retained Earnings, Mar. 1, 2016
$2,000
Net Income
10,800
Dividends
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2016
Retained Earnings, Mar. 1, 2016
$2,000
© 2016 Pearson Education, Inc.

28. LOUIS COMPUTER SERVICE Statement of Retained Earnings
Demonstration of E1-32
Retained Earnings, Mar. 1, 2016
$2,000
Net Income
10,800
Dividends
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2016
Retained Earnings, Mar. 1, 2016
$2,000
Net income for the month
10,800
© 2016 Pearson Education, Inc.

29. LOUIS COMPUTER SERVICE Statement of Retained Earnings
Demonstration of E1-32
Retained Earnings, Mar. 1, 2016
$2,000
Net Income
10,800
Dividends
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2016
Retained Earnings, Mar. 1, 2016
$2,000
Net income for the month
10,800
12,800
© 2016 Pearson Education, Inc.

30. LOUIS COMPUTER SERVICE Statement of Retained Earnings
Demonstration of E1-32
Retained Earnings, Mar. 1, 2016
$2,000
Net Income
10,800
Dividends
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2016
Retained Earnings, Mar. 1, 2016
$2,000
Net income for the month
10,800
12,800
Less: Dividends
1,300
© 2016 Pearson Education, Inc.

31. LOUIS COMPUTER SERVICE Statement of Retained Earnings
Demonstration of E1-32
Retained Earnings, Mar. 1, 2016
$2,000
Net Income
10,800
Dividends
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2016
Retained Earnings, Mar. 1, 2016
$2,000
Net income for the month
10,800
12,800
Less: Dividends
1,300
Retained Earnings, Mar. 31, 2016
$11,500
© 2016 Pearson Education, Inc.

32. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Stockholders’ Equity
© 2016 Pearson Education, Inc.

33. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Receivable
7,600
Stockholders’ Equity
© 2016 Pearson Education, Inc.

34. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Receivable
7,600
Office Supplies
900
Stockholders’ Equity
© 2016 Pearson Education, Inc.

35. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Receivable
7,600
Office Supplies
900
Equipment
18,000
Stockholders’ Equity
© 2016 Pearson Education, Inc.

36. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Office Supplies
900
Equipment
18,000
Stockholders’ Equity
© 2016 Pearson Education, Inc.

37. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Note Payable
8,000
Office Supplies
900
Equipment
18,000
Stockholders’ Equity
© 2016 Pearson Education, Inc.

38. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Note Payable
8,000
Office Supplies
900
Total Liabilities
11,500
Equipment
18,000
Stockholders’ Equity
© 2016 Pearson Education, Inc.

39. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Note Payable
8,000
Office Supplies
900
Total Liabilities
11,500
Equipment
18,000
Stockholders’ Equity
Common Stock
6,000
© 2016 Pearson Education, Inc.

40. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Note Payable
8,000
Office Supplies
900
Total Liabilities
11,500
Equipment
18,000
Stockholders’ Equity
Common Stock
6,000
Retained Earnings
© 2016 Pearson Education, Inc.

41. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Note Payable
8,000
Office Supplies
900
Total Liabilities
11,500
Equipment
18,000
Stockholders’ Equity
Common Stock
6,000
Retained Earnings
Total Stockholders’ Equity
17,500
© 2016 Pearson Education, Inc.

42. LOUIS COMPUTER SERVICE
Demonstration of E1-33
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Notes Payable
8,000
Office Supplies
900
Retained Earnings, Mar. 31, 2016
11,500
Equipment
18,000
Common Stock
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2016
Assets
Liabilities
Cash
$2,500
Accounts Payable
$3,500
Accounts Receivable
7,600
Note Payable
8,000
Office Supplies
900
Total Liabilities
11,500
Equipment
18,000
Stockholders’ Equity
Common Stock
6,000
Retained Earnings
Total Stockholders’ Equity
17,500
Total Assets
$29,000
Total Liabilities and Stockholders’ Equity
© 2016 Pearson Education, Inc.

43. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Star Motor Service had net income for the year of $30,000. In addition, the balance sheet reports the following balances:
Jan. 1, 2016
Dec. 31, 2016
Notes Payable
$28,000
$35,000
Cash
10,000
22,000
Office Furniture
25,000
30,000
Building
100,000
Accounts Payable
8,000
6,000
Total Stockholders’ Equity
130,000
160,000
Accounts Receivable
2,000
12,000
Equipment
35,000
Office Supplies
4,000
Calculate the return on assets (ROA) for Star Motor Service for the year ending December 31, 2016.
© 2016 Pearson Education, Inc.

44. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Jan. 1, 2016
Dec. 31, 2016
Cash
$10,000
$22,000
Accounts Receivable
2,000
12,000
Office Supplies
4,000
Equipment
25,000
35,000
Office Furniture
30,000
Building
100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
© 2016 Pearson Education, Inc.

45. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Jan.1, 2016
Dec.31, 2016
Cash
$10,000
$22,000
Accounts Receivable
2,000
12,000
Office Supplies
4,000
Equipment
25,000
35,000
Office Furniture
30,000
Building
100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
Beginning total assets ═ $10,000 + $2,000 + $4,000 + $25,000 + $25,000 + $100,000
═ $166,000
© 2016 Pearson Education, Inc.

46. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Jan.1, 2016
Dec.31, 2016
Cash
$10,000
$22,000
Accounts Receivable
2,000
12,000
Office Supplies
4,000
Equipment
25,000
35,000
Office Furniture
30,000
Building
100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
Beginning total assets ═ $10,000 + $2,000 + $4,000 + $25,000 + $25,000 + $100,000
═ $166,000
Ending total assets ═ $22,000 + $12,000 + $2,000 + $35,000 + $30,000 + $100,000
═ $201,000
© 2016 Pearson Education, Inc.

47. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Beginning total assets
$166,000
Ending total assets
$201,000
Average Total Assets ═ (Beginning total assets + ending total assets) / 2
═ $166,000 + $201,000 ∕ 2
© 2016 Pearson Education, Inc.

48. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Beginning total assets
$166,000
Ending total assets
$201,000
Average Total Assets ═ (Beginning total assets + ending total assets) / 2
═ $166,000 + $201,000 ∕ 2
═ $183,500
© 2016 Pearson Education, Inc.

49. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Net income
$30,000
Average total assets
$183,500
Return on Assets ═ Net income
Average total assets
© 2016 Pearson Education, Inc.

50. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Net income
$30,000
Average total assets
$183,500
Return on Assets ═ Net income
Average total assets
═ $30,000 ∕ $183,500
© 2016 Pearson Education, Inc.

51. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Net income
$30,000
Average total assets
$183,500
Return on Assets ═ Net income
Average total assets
═ $30,000 ∕ $183,500
═ 0.163
© 2016 Pearson Education, Inc.

52. © 2016 Pearson Education, Inc.
Demonstration of E1-39
Net income
$30,000
Average total assets
$183,500
Return on Assets ═ Net income
Average total assets
═ $30,000 ∕ $183,500
═ 0.163
═ 1.63%
© 2016 Pearson Education, Inc.

53. © 2016 Pearson Education, Inc.
End of Chapter 1
© 2016 Pearson Education, Inc.